MINUTES OF MEETING
ASSEMBLY COMMITTEE ON COMMERCE
Sixty-seventh Session
June 28, 1993
The Assembly Committee on Commerce was called to order by Chairman Gene T. Porter at 5:50 p.m., Monday, June 28, 1993, in Room 332 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Gene T. Porter, Chairman
Mr. Morse Arberry, Jr., Vice Chairman
Ms. Kathy M. Augustine
Mr. Rick C. Bennett
Mr. John Bonaventura
Ms. Chris Giunchigliani
Mr. Dean A. Heller
Mr. David E. Humke
Ms. Erin Kenny
Mr. Richard Perkins
Mr. Scott Scherer
Ms. Myrna T. Williams
COMMITTEE MEMBERS ABSENT:
Mr. Val Z. Garner
GUEST LEGISLATORS PRESENT:
Senator Matthew Q. Callister, District 8; Senator Leonard V. Nevin, District 2; Assemblyman Joseph E. Dini, Jr., District 38.
STAFF MEMBERS PRESENT:
Mr. Paul Mouritsen, Senior Staff Analyst, Legislative Counsel Bureau
OTHERS PRESENT:
Mr. Scott Walshaw, Commissioner of Financial Institutions; Mr. Rod Barbash, Nevada Collectors Association; Mr. Harvey Whittemore of Lionel, Sawyer and Collins, Nevada Resort Association; Ms. Vicki Riley, Nevada Trial Lawyers Association; Mr. Warren Hardy, Del Webb's Sun City of Las Vegas at Summerlin; Mr. Ben Graham, District Attorneys Association; Ms. Brooke Nielsen, Assistant Attorney General; Ms. Collette Rausch, Deputy Attorney General for Consumer Affairs; Mr. Steve Sisolak, American Distributing Company (see also Exhibit B attached hereto).
ASSEMBLY BILL 480Makes various changes related to collection agencies.
Mr. Scott Walshaw, Commissioner of Financial Institutions, testified. He submitted a proposed amendment to AB 480 (Exhibit C) and advised the proposed amendment represented a combination of portions of Senate Bill 406 and AB 480. He submitted a memorandum providing an overview of AB 480 and a memorandum concerning the legislative intent of AB 480 (jointly, Exhibit D).
Mr. Rod Barbash, Nevada Collectors Association, testified. He said 26 states had laws concerning collection agencies. He stated eight of those states had had laws similar to Nevada's (current) law, which prohibited out-of-state collection agencies from contacting debtors in Nevada by mail or by phone. He advised legal counsel for the association was of the opinion such a law prohibited interstate commerce and had requested the association sponsor a bill which would "open the state's borders."
Chairman Porter asked Mr. Walshaw what would happen if the legislature did not pass AB 480. Mr. Walshaw replied the provisions of SB 28, passed in the last legislative situation, would remain in effect.
Chairman Porter asked Mr. Walshaw how passage of AB 480 would benefit the citizens of Nevada. Mr. Walshaw stated the Financial Institutions Division had requested certain provisions of AB 480 which the division believed would strengthen Nevada's laws governing collection agencies. He advised AB 480 would eliminate the division's formal involvement in the issuing of exemptions to out-of-state collection agencies (to do collections in Nevada). He said consumer complaints regarding collection agencies would continue to be referred to either the licensing authority or the attorney general of the state in which the collection agency complained of was located or to the Federal Trade Commission; he explained the division did not deal with such complaints.
Chairman Porter asked if AB 480 would allow the division to deal with consumer complaints about out-of-state collection agencies. Mr. Walshaw replied it would not.
Mr. Walshaw said both the Attorney General of Nevada and the Nevada Collectors Association's legal counsel had concluded Nevada could not legally require an out-of-state collection agency to be licensed in Nevada if all that agency did was contact Nevada debtors on behalf of clients located outside Nevada. He explained an attempt was made through SB 28, passed during the last legislative session, to allow the Financial Institutions Division to issue exemptions from licensing to out-of-state collection agencies who qualified for such exemptions pursuant to the provisions of SB 28. He indicated those provisions were similar to the provisions of Section 2 of AB 480.
Chairman Porter asked what AB 480 would change. Mr. Walshaw replied, "As far as Senate Bill 28, it doesn't change much of anything." Chairman Porter asked what AB 480 would allow the Commissioner of Financial Institutions to do that he could not presently do. Mr. Walshaw answered Section 1 would permit the commissioner to adopt regulations to establish standards for trust accounts maintained by licensed Nevada collection agencies for "out-of-state locations." He said Section 4 clarified the circumstances under which interest, fees or expenses which were authorized by state statute could be added to an account submitted to a Nevada collection agency for collection. He stated Section 5 changed the manner in which complaints against licensed collection agencies were handled. He explained Section 6 modified the circumstances under which an administrative fine could be levied against a licensed collection agency and would make it easier for the division to pursue actions against such agencies.
Mrs. Williams asked why Nevada could not require out-of-state collection agencies to be registered. Mr. Walshaw indicated requiring such agencies to be registered was essentially what Nevada presently did.
A discussion was held between Mrs. Williams and Mr. Walshaw regarding the handling of complaints made by Nevada citizens about out-of-state collection agencies.
Ms. Augustine asked if the section entitled "Section 3" in the proposed amendment to AB 480 (Exhibit C) was intended to replace Section 2 of AB 480 as written. Mr. Walshaw explained Section 2 of AB 480, as written, would remain but would become Section 5 of AB 480 as it was proposed to be amended.
Ms. Augustine asked for additional clarification regarding the proposed amendment to AB 480. Mr. Walshaw replied Section 1 of AB 480 as written would become Section 2 of AB 480 as it was proposed to be amended, Section 2 would become Section 5 and Section 3 of AB 480 as written would be deleted from the amended bill. He referred to SB 406 and explained Sections 5 and 7 of SB 406 would become Sections 1 and 3, respectively, of AB 480 as it was proposed to be amended.
Chairman Porter closed the hearing on AB 480.
ASSEMBLYMAN GIUNCHIGLIANI MOVED TO AMEND AND DO PASS
AB 480.
ASSEMBLYMAN PERKINS SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY.
ASSEMBLY BILL 784Expands limitation on civil liability of owner or keeper of certain public accommodations for property left on premises.
Mr. Harvey Whittemore of Lionel, Sawyer and Collins, Nevada Resort Association, testified in support of AB 784. He discussed a case recently before the Nevada Supreme Court in which the court reversed the granting of a summary judgment which judgment said Nevada's innkeepers statute did not apply to personal property left in valet-parked cars. He advised the association asked that the policy issue of whether the limitations on liability which were associated with Nevada's innkeepers statute would extend to parked cars, either self- parked or valet-parked, or to any property left "elsewhere on the premises" be presented to the legislature. He stated when an individual either had his vehicle valet-parked or parked his vehicle himself on a Nevada resort facility, it was extremely difficult for the owner or keeper of that facility to determine the value of any articles left inside the vehicle and such a situation subjected the owner to potential damages in excess of $10,000 to $15,000.
Chairman Porter asked the current (legal) standard for damage to a vehicle parked in valet parking. Mr. Whittemore replied the standard for damage to or theft of such a vehicle was simple negligence but explained it was the personal property left in such a vehicle rather than the vehicle which was being discussed.
Discussions ensued between Chairman Porter and Mr. Whittemore regarding the language of AB 784 with respect to the standards of negligence to be established with respect both to the contents of a vehicle and to the vehicle itself.
Mr. Bonaventura referred to line 5, on page 1, of AB 784 and suggested the words "in a vehicle" be substituted for the words "left anywhere else." Chairman Porter and Mr. Whittemore concurred in Mr. Bonaventura's suggestion.
Ms. Vicki Riley, Nevada Trial Lawyers Association, addressed the Chair and advised "Mr. McNalley" wished to testify in opposition to AB 784 but would not be available until the following morning. Chairman Porter asked Ms. Riley if Mr. McNalley's concern about AB 784 was a concern with the expansiveness of its language. She replied it was. Chairman Porter asked, "Do you think he would have a problem with the intent being the contents of the vehicle having a gross negligence standard as opposed to the vehicle?" and explained under AB 784 the standard for damage to a vehicle would remain the standard of basic negligence, but the standard for damage to the contents of a vehicle would be one of gross negligence and would require an individual who submitted his vehicle for valet-parking to advise the parking attendant of the contents of his vehicle and to place the attendant on notice to protect those contents. Ms. Riley acknowledged she understood the distinction. Chairman Porter then commented he understood Mr. McNalley could not be present and did not pursue a response to his question of Ms. Riley.
Chairman Porter closed the hearing on AB 784.
ASSEMBLY BILL 783Regulates finder's fee in real estate transactions.
Mr. Warren Hardy, Del Webb's Sun City of Las Vegas at Summerlin (Sun City), testified. He said AB 783 would allow Sun City or any like company to provide a gift to any of its residents who referred an individual to the company. He advised such a gift could not exceed $100 in cash or $100 in value and such gifts could not be given (to the same individual) more than five times in a calendar year.
Mr. Arberry referred to the language in AB 783 which provided it was unlawful for a person to accept more than five fees or gifts such as those being discussed in a calendar year. Mr. Arberry asked how that provision would pertain to a family. Mr. Hardy replied he did not know how that provision would pertain to a family, and discussions ensued between Mr. Arberry and Mr. Hardy regarding the provision.
Chairman Porter closed the hearing on AB 783.
ASSEMBLYMAN SCHERER MOVED DO PASS AB 783.
ASSEMBLYMAN ARBERRY SECONDED THE MOTION.
THE MOTION WAS CARRIED UNANIMOUSLY BY ALL THOSE PRESENT; Assemblyman Giunchigliani was absent at the time of the vote.
AB 341 Provides for registration and licensing of paralegals.
Mr. Ben Graham, District Attorneys Association, testified. He proposed AB 341 be amended to permit district attorneys, in limited circumstances, to appoint special prosecutors with limited jurisdictions.
Chairman Porter asked if the amendment proposed by Mr. Graham would cause any fiscal impact on the state. Mr. Graham replied it would not.
A discussion was held between Chairman Porter and Mr. Bonaventura. Mr. Bonaventura indicated he had no objection to Mr. Graham's proposed amendment.
ASSEMBLYMAN PERKINS MOVED TO AMEND AND DO PASS AB 341.
ASSEMBLYMAN SCHERER SECONDED THE MOTION.
THE MOTION WAS CARRIED UNANIMOUSLY BY ALL THOSE PRESENT; Assemblyman Giunchigliani was absent at the time of the vote.
SENATE BILL 375 Makes various changes relating to regulation of trade practices.
Chairman Porter turned the meeting over to Vice Chairman Arberry for the purpose of conducting the hearing on SB 375.
Senator Matthew Q. Callister, District 8, testified. He said it was difficult to define who was and who was not a telemarketer. He explained the 1987 legislature, rather than attempting to narrowly define "telemarketer," had established a broad definition of "telemarketer" and had created many exemptions (from the definition). He stated the Supreme Court of Nevada ruled such an approach was unconstitutional, and provided a copy of the Supreme Court's opinion in that regard (Exhibit E).
Senator Leonard V. Nevin, District 2, testified. He discussed the telemarketing legislation passed during the 1987 legislative session and discussed some problems which arose due to the licensing of telemarketers. He advised SB 375 would provide telemarketers no longer be licensed but instead be registered and would give the Attorney General jurisdiction to enforce telemarketing laws.
Ms. Augustine asked if any amendment would be proposed to SB 375. Senator Nevin contended any change to SB 375 would create serious constitutional problems with the bill.
Ms. Augustine asked, "Can you tell me why there are so many amendments? Did it go anyplace else besides Commerce or Labor?" Senator Callister replied. He described various steps taken in the processing of SB 375 and advised SB 375 was rereferred to the Senate Finance Committee after the Nevada Supreme Court rendered the decision previously discussed.
Mr. Scherer asked Senator Callister whether the effect of the Supreme Court's decision was that Nevada currently had no valid provisions for the regulation of telemarketing. Senator Callister said he was not certain he knew the answer to Mr. Scherer's question. He stated the Supreme Court's decision focused on criminal prosecution of "someone who is acting as a seller without a license", but contained language which suggested if someone were to challenge the regulatory, non-criminal aspects (of Nevada's telemarketing laws), the Court would determine those aspects also to be unconstitutional.
Senator Nevin said it was important to note SB 375 would require telemarketers who made calls to Nevada from out of state to pay a registration fee. He contended many of the problems Nevada experienced with telemarketers concerned telemarketers who called into Nevada from out of state.
Ms. Giunchigliani referred to the language in lines 38 and 39, on page 10, of SB 375, and asked why that provision was limited to the New York Stock Exchange. Senator Callister explained Nevada's current telemarketing laws provided an exemption for virtually any entity which was "publicly traded" and suggested it was not appropriate to establish different rules for different telemarketers based upon how those telemarketers "were owned." He said the Attorney General had recommended for purposes of defining who was and who was not a telemarketer, the fact an entity was one which was publicly traded on the New York Stock Exchange and only on that stock exchange was a factor which could be considered in determining such entity was not a "traditional telemarketer." Senator Callister said an existing Nevada telemarketer, Tellus Industries, Inc. (Tellus), which controlled approximately one quarter of the Nevada telemarketing market, had been publicly traded and was therefore exempt from Nevada's current telemarketing laws. He stated it was determined Tellus "could qualify on another stock exchange."
Senator Callister provided a document pertaining to the net revenue of Tellus for the nine month period which ended June 30, 1992, (Exhibit F) and stated that net revenue was $13,278,000.
Ms. Giunchigliani asked if, except as provided by sub-subsections a through x of subsection 9 of Section 18, any telemarketer who was publicly traded would be covered by the provisions of SB 375. Senator Callister replied there were no exemptions.
Ms. Giunchigliani asked for confirmation SB 375 would not create a special statute for "one population versus another population." Senator Callister indicated it would not.
Senator Callister indicated an amendment to SB 375 might be forthcoming and inquired whether the chair wished him to comment on such amendment. Vice Chairman Arberry indicated he preferred Senator Callister defer his comments until it was determined what the amendment would provide.
A discussion was held between Mr. Bonaventura and Senator Callister regarding action which might be taken by Tellus if the legislature passed SB 375, either as it was written or as it might be amended.
Senator Callister provided a memorandum of points and authorities prepared in connection with litigation brought by a telemarketer who contended Nevada's scheme of regulating telemarketers was unconstitutional because it did not provide equal protection under the law (Exhibit G).
A discussion was held between Mr. Bonaventura and Senator Callister regarding the amendment to SB 375 Senator Callister had suggested might be forthcoming.
Senator Nevin reiterated his prior comments regarding the fragility of SB 375 and urged it be passed without any amendment.
Mr. Arberry asked if the provisions of SB 375 conformed to the decision of the Supreme Court previously discussed. Senator Callister replied the legal division of the Legislative Counsel Bureau believed it did. Mr. Arberry asked if by the legal division Senator Callister meant Lorne Malkiewich. Senator Callister replied he did. Mr. Arberry asked if Mr. Malkiewich had provided his opinion in the form of a letter or had provided it verbally. Senator Callister replied Mr. Malkiewich had expressed his opinion in written form.
Ms. Brooke Nielsen, Assistant Attorney General, testified after first introducing Ms. Collette Rausch, Deputy Attorney General for Consumer Affairs. She stated she concurred with the testimony given by Senators Callister and Nevin. She declared without AB 375, Nevada had no telemarketing law which could be enforced "criminally" and in fact, might have no telemarketing regulation of any kind.
She stated the Nevada Supreme Court, in its opinion (Exhibit E), said if Nevada had a telemarketing law crafted in the manner of California's telemarketing law, Nevada's law would be constitutional. She advised the present version of SB 375 was based upon California's telemarketing law but was stronger and less vague than California's law. She indicated SB 375 would provide for strong enforcement of telemarketing regulations.
Mr. Steve Sisolak, American Distributing Company, testified. He stated telemarketers were presently following no law and said "...everything's in hold pending the outcome of 375." He referred to the Nevada Supreme Court opinion provided by Senator Callister (Exhibit E) and said every telemarketer and its attorney had a copy of that opinion. He suggested many telemarketers were willing to employ very expensive attorneys to challenge the constitutionality of Nevada's telemarketing statute. He declared many telemarketers would prefer there was no new telemarketing statute but some telemarketers wished to be regulated.
He stated he understood SB 375, in its present form, was constitutional. He advised he had become aware of a proposed amendment to SB 375 which would affect one telemarketing company which was presently unlicensed and said he wished to provide a press release "from that company." He provided a press release issued by Tellus Industries, Inc. (Exhibit H). He referred to figures set forth in the press release (Exhibit H) regarding Tellus' sales and declared he could not imagine why a company whose sales would approach $120 million per year would not pay a $6,000 registration fee. Mr. Sisolek stated under SB 375 all telemarketing companies were to be registered and urged the committee to support SB 375 in its present form, with no amendments.
Ms. Augustine referred to Exhibit H and pointed out Tellus had offices in several states other than Nevada. She asked how Tellus was regulated in those states. Mr. Sisolak said Tellus was exempted from California's telemarketing law. He discussed telemarketing laws of other states but did not indicate how Tellus was regulated in those states.
Assemblyman Joseph E. Dini, Jr., District 38, testified. He said an amendment to SB 375 was proposed by Tellus which would permit Tellus to be exempt from the provisions of SB 375 for a period of six months after which period Tellus would cease its operations in Nevada. He suggested the amendment proposed by Tellus had merit and asked the committee to give serious consideration to the amendment.
Mr. Heller asked if the amendment to SB 375 proposed by Tellus would be presented on the floor of the Assembly. Mr. Dini replied it would be presented to the committee.
Mr. Heller asked why Tellus did not want to be registered for the six month period discussed. Mr. Dini declined to reply, and a colloquy ensued between Mr. Heller and Mr. Dini.
Ms. Augustine asked if Mr. Dini was proposing the effective date of SB 375 be delayed to January 1, 1994. Mr. Dini replied he was not making that proposal but was suggesting SB 375 be amended to permit Tellus to do business (under an exemption to SB 375) until December 31, 1993.
A discussion was held between Ms. Augustine and Mr. Dini.
Senator Nevin again urged the committee to pass AB 375 without making any amendments thereto.
Ms. Giunchigliani asked Senator Nevin if the only issue regarding telemarketers with which SB 375 dealt was that of registration. Senator Nevin replied SB 375 dealt only with registration of telemarketers and with enforcement of that registration by the Attorney General.
Mr. Sisolak provided further testimony. He contended if one telemarketing company was permitted to be exempt from SB 375 for six months, all telemarketing companies would request a like exemption and questioned what might happen to Nevada consumers who were solicited by a company given such an exemption during the six month period when that company was not subject to the law.
Vice Chairman Arberry closed the hearing on SB 375 and stated he would accept no motions on SB 375.
There being no further business to come before the committee, Vice Chairman Arberry adjourned the meeting.
RESPECTFULLY SUBMITTED,
________________________
SARA J. KAUFMAN
Committee Secretary
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Assembly Committee on Commerce
June 28, 1993
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